Ben Powell, his wife, Kate, and their teenaged son, Steve, rent a New England seaside house for their summer vacation. Unknown to them, the house has been haunted ever since the day, 100 years ago, that Felicity Twitchell accidentally met her death while axing her unfaithful bridegroom Ebenezer and their servant girl Jenny. The three ghosts, infuriated that their private domain is being invaded, go on a spree of destruction, for which young Steve is blamed. Although the spirits eventually materialize before Steve, his parents and his millionaire Uncle George persist in believing that he is a troublemaker. The situation becomes desperate when the ghosts sink Uncle George's yacht and Steve once more is held responsible. Frantic, he seeks the aid of two local sisters, Priscilla and Carol, direct descendants of Jenny, who advise him to bribe the ghosts with gifts. After the unearthly trio has sunk a second yacht belonging to Uncle George, Steve purchases cosmetics and lingerie for Felicity and Jenny, an act which prompts his uncle to call in a psychiatrist, Dr. Frieden. Priscilla then suggests that Steve give a costume party so that the ghosts may materialize in their nineteenth-century clothes. The party, however, turns into a shambles when Felicity becomes so enamored of Uncle George that she pushes him off a cliff in order to make him her ghost-husband. Finally, as one of Uncle George's yachts rises miraculously from the depths and Dr. Frieden races off to seek the aid of a psychiatrist himself, the Powells decide to leave their summer home. The old Twitchell place is left to the spirits of Ebenezer and Jenny, and the ghosts of Felicity and Uncle George are sitting in the rumble seat of the Powell car as it heads back to the city.